By Dominic Chopping
STOCKHOLM--Skandinaviska Enskilda Banken AB said Wednesday that second-quarter net profit fell amid higher credit loss provisions and a fine from Sweden's financial regulator.
The Sweden-based bank posted net profit of 3.5 billion Swedish kronor ($384.8 million) for the three months ended June 30 compared with SEK4.89 billion a year earlier. The result was just shy of the SEK3.58 billion forecast from analysts polled by FactSet.
Profit was dented by a SEK1 billion fine for inadequate anti-money laundering governance from FSA, Sweden's regulator. SEB said Wednesday that it won't appeal the fine despite not completely agreeing with the decision.
Net interest income for the quarter rose 6.2% to SEK6.05 billion while credit loss provisions in the quarter rose to SEK2.69 billion from SEK386 million a year prior.
Most of the expected credit losses stem from the bank's offshore oil portfolio, which continued to be challenged by slow activity due to low oil prices, and from large corporate and financial institutions.
SEB previously said that an expected credit loss level of around SEK6 billion in 2020 would be a good outcome given the severe economic downturn. It believes that the probability of staying at that level has increased, but visibility on the future remains low.
The bank's common equity Tier 1 ratio--a key measure of financial strength--stood at 17.8% at the end of the quarter, up from 16.6% a year prior.
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